Log Book Loan Scam

[HumberMart]

With some irony (seeing as he's an FD!) a friend has just been caught by a scam involving 'Log Book Loans'.

Despite being a very active car buyer for many years, and the masses of stuff I now find on Google about them, I'd never heard of them until today (- although I did find a previous post on the forum regarding the stupid (427%) APR that they charge was commented on a couple of years ago.)

This 'scam' has nothing to do with the APR though, it involves a process whereby someone who owns the car, takes out a loan from Log Book Loans the day before they then 'sell' the car to another accomplice, who manages to register the car in their name (I think by saying the V5 was lost).

The second 'owner' then advertises and sells the car to some unsuspecting punter, who thinks he's ok, 'cos he has a HPI check, and he's buying it from the guy who's address is on the V5. All this needs to happen within 2 weeks to ensure the car doesn't fall foul of the HPI check.

A few weeks later, the unlucky punter then gets 'the boys' round from Log Book Loans to repossess, and sure enough by then, it's listed on the HPI register.

Now there are many issues of legality here, and it seems lengthy and expensive court processes will eventually protect the innocent. But who wants to get involved in a mess like that!

 

[NormanC]

I don't understand this.

When I tried to register a car in my name without the V5 it took 2 weeks and I was lucky it was that quick as the previous owner responded immediately to the DVLA saying he had sold the vehicle.

How do you register a car immediately without the V5 because my local DVLA office say it can't be done?

 

[martin_a]

I think it moves quicker if you have the V5c/2 which is the new owner slip as i've had to do that recently (still waiting on the new V5 but its only been a week). I'm still not sure how this would work either though!

m.

 

[HumberMart]

No it wasn't immediate, I think the 2 weeks is the usual time it takes. They must prepare everything in advance, and even advertise the car before they get the V5 back, so that the whole process transfers 'ownership' twice in the 2 week period.

The only worry for them is how long it takes to update the HPI register, maybe that could be more than 2 weeks to give them some safety net - I'm not sure.

Even if they get caught by the HPI coming through in time, they could easily explain it away to the punter, and suimply lose the sale without anybody realising about the scam.

 

[HumberMart]

I think it moves quicker if you have the V5c/2 which is the new owner slip as i've had to do that recently (still waiting on the new V5 but its only been a week). I'm still not sure how this would work either though!

m.

It's nothing magic, it's only trying to sell a car which has a secured loan against it, but without it being spotted by the buyer.

Some buyers wouldn't bother to have it checked anyway, and the fact that the car is registered at the sellers address just gives them false confidence that nothing dodgy is going on.

 

[219]

You could always claim you have 'lost' the v5 and obtain a duplicate before applying for the loan .

Give one v5 to the loan company and the other to the car buyer , who should be able to transfer the car OK .

In such a case , if all checks were passed at time of sale , HPI guarantee should safeguard the buyer .

 

[HumberMart]

I suspect the main reason why 'Log Book Loans' are used is because they pay out the cash within 24hrs without credit checks, so it can all be done the day before the car is sold.

 

[Dieselman]

If I was looking for a car to buy privately and the current owner had only had the car less than two weeks, that would ring loud alarm bells.

 

[Bobby Dazzler]

Holly thread resurrection SimonEccles.

Welcome to MBClub.

A link like that in your first post makes you look like you came here from the canned meat forum. I hope I'm wrong.

 

[Rory]

The second 'owner' then advertises and sells the car to some unsuspecting punter, who thinks he's ok, 'cos he has a HPI check, and he's buying it from the guy who's address is on the V5. All this needs to happen within 2 weeks to ensure the car doesn't fall foul of the HPI check.

Log book loans are supposed to be registered with HPI within 24hrs and if they're not, then the car can't be repossessed. Yet it happens.

I've never heard of the car being resold to someone else first - as others have stated, it's usually just that the person taking the loan sells the car, perhaps with a duplicate V5C or perhaps just saying they've lost it.

 

[markjay]

A neighbour had his car 'repossessed' by mistake - the debt collectors got the plate wrong by one character, i.e. it was not his car they were actually after.

Initially he thought it was stolen, but by the time he figured out what really happened to it, the debt collectors already sold it.

Oddly he has no case - or so they say - apparently there is a precedence that the original (wronged) owner is only entitled to the price achieved by the debt collectors. But as they auctioned it off as repossessed vehicle with no keys, it obviously didn't fetch very much... and that's all they are willing to pay him.

The new owner apparently has a valid V5 from the DVLA with his name on it - which is mind boggling because even if the debt collectors physically had the car, they should not have been able to transfer ownership at the DVLA because they would have no proof that it had outstanding finance (which it clearly didn't). Yet transfer ownership they did...

The reason I mention it is that it clearly indicates that the DVLA is a bucket full of holes. It may seem impenetrable to the occasional citizen dealing with them but people who are in the trade and in the know can get pretty much everything done.

 

[Bobby Dazzler]

Reposession by mistake sounds an awful lot like theft to me. How did he find out? Doesn't sound like he was notified even.

 

[Gazz270]

Having worked as a bailiff a few years ago the only people being scammed are the loan companies,if the car has been bought by a private individual for current market value(within 10% of glasses guide at the time) and you can prove you have paid this with either bank transfer statement or cash withdrawal receipt then the car cannot be taken,private buyers have no legal obligation to hpi a car,even though the loan is against the car the loan company will still chase the applicant for the money and also involve police because fraud has been committed,

 

[markjay]

Reposession by mistake sounds an awful lot like theft to me. How did he find out? Doesn't sound like he was notified even.

My neighbour reported the car stolen to the police and to the insurance and thought nothing more of it... till he got a call from someone who told him he bought the car in an auction with no keys, and wondered if my neighbour - being the previous keeper - happened to have a set of keys for the car? (not sure how the buyer got the telephone number). The story unfolded from there... the insurance hadn't paid yet at the time, and obviously won't pay now as the car wasn't actually stolen, and at any rate he would not want to have a claim on his policy if he can avoid it.

 

[Doodle]

There's something not quite adding up there. If the baliffs had been proven to have the wrong vehicle, then they had no entitlement to auction it. How it can be legally allowable to force someone to accept a undervalued sum for their car beats me.

Your name on the V5 is not proof of ownership, and never has been - however they now make it crystal clear in big red lettering all over the front.

 

[markjay]

There's something not quite adding up there. If the baliffs had been proven to have the wrong vehicle, then they had no entitlement to auction it. How it can be legally allowable to force someone to accept a undervalued sum for their car beats me.

Your name on the V5 is not proof of ownership, and never has been - however they now make it crystal clear in big red lettering all over the front.

Unfortunately these anomalies do exist.

Some years ago our office was evacuated with 5 minutes notice by local firemen, following a fire in a nearby building site where gas cylinders were stored. A residential building near us was evacuated as well. We were only allowed back after two days (once the cylinders cooled down).

I wrote to the construction company (one of the UK largest construction firms, I should add), and asked for compensation. I received a letter from their legal department citing a precedence saying that only direct fire damages are entitled to compensation, but not any consequential or financial damages.

I thought this was grossly unfair - these people were building a massive business and leisure centre (for presumably not inconsiderable profit), and yet we were expected to incur the loss of having our staff on paid holiday for two days plus loss of earnings.

As they were insured, I just can't see the logic of not incurring the cost of the financial damage that the on their building site fire caused to our business.

After that experience, I am no longer surprised that these strange legal quirks actually exist.

 

[Rory]

Having worked as a bailiff a few years ago the only people being scammed are the loan companies,if the car has been bought by a private individual for current market value(within 10% of glasses guide at the time) and you can prove you have paid this with either bank transfer statement or cash withdrawal receipt then the car cannot be taken,private buyers have no legal obligation to hpi a car,even though the loan is against the car the loan company will still chase the applicant for the money and also involve police because fraud has been committed,

Log Book loans are covered by some ancient law and the usual consumer protection stuff doesn't apply. The Government was trying to get them all to sign up to a voluntary code of conduct.

There are certainly reports on various forums that debt collectors will turn up and just take the car. If the Police are called they go into "it's a ciivil matter" mode and threaten to arrest to car owner if he makes a fuss.

 

[gIzzE]

The scary thing is there is nothing stopping me taking a loan on any car I see in the street, I have taken out finance on over 50 cars in the last 15 years and not once have they asked for any more than the reg and vin number.

Something to think about!

 

[janner]

A neighbour had his car 'repossessed' by mistake ...
Oddly he has no case - or so they say - apparently there is a precedence that the original (wronged) owner is only entitled to the price achieved by the debt collectors. ....

I'd be very surprised if that was the case. Lawyer required ASAP.

 

[markjay]

I'd be very surprised if that was the case. Lawyer required ASAP.

1. It was the case indeed, I know the neighbour well, and knew his car.

2. The car's actual value was quite low, so he is reluctant to pay a solicitor because given the precedence (which the debt collectors provided and he checked - I didn't check it myself) he felt that he might not win or at any rate not be granted costs. He's thinking of going through the Small Claims Court, but this will obviously limit the amount he can ask for. That was the latest when i last spoke to him a couple of weeks ago.

He is a young professional and is doing well for himself, it's not the actual financial loss that he is annoyed about (he did like the car though), but the whole process and the time wasting, and he does not want to let them get away with it if he can.

But those debt collectors are well-seasoned in the ins and outs of the law, and seem to have utter disregard to anything that is down to reason or morality.